PITFALLS OF IMPLEMENTING THE BALANCED SCORECARD

Several companies across the globe are currently in the throes of implementing a balanced scorecard in their organizational structures. The popularity of the scorecard has soared over the last two decades or so, owing to the success of the companies that have already implemented it. Unfortunately, some companies are bound to fail in their implementation processes. This is because they have hardly done research on the scorecard, and how best it can be applied to the specific situations of their companies. Lack of research is detrimental to the implementation process, and is often the main cause of many companies failing to administer properly the scorecard.

Lack of research also results in the company falling into the several classic pitfalls that most companies make when it comes to implementing the balanced scorecard. One of the major pitfalls a company falls into if it does not do enough research is a situation whereby the senior managers show little or lack of commitment to the implementation process. The lack of commitment could be as a result of their not being convinced by the material they have been presented with regarding the efficacy of the scorecard.

For the implementation process to be successful, the senior management needs to be completely on-board with the process. Experts on the scorecard usually recommend that the top managers be on the front line when it comes to championing for the implementation of the scorecard. In addition, experts opine that the members of the upper level should refrain from delegating any of their duties that pertain to the scorecard implementation process in order to be fully in charge of the process.

Another pitfall of lack of research is a situation whereby the members of the core implementation team have relatively little knowledge about the balanced scorecard. The core implementation team is integral to the success of the implementation process. The team is responsible for educating the rest of the staff members about the importance of the scorecard as well as the benefits that the company will accrue from its implementation. In addition, the team is mandated to train the staff members on the use of the scorecard. If the members of the core team have limited knowledge on the scorecard, it is more than likely that the entire project will fail.

Furthermore, lack of research will also ultimately lead to an unrealistic balanced scorecard. When limited research is undertaken, it becomes difficult to design a scorecard that aligns itself with the company’s overall strategy, goals, and progress. In addition, lack of communication with the subordinate employees leaves the management disillusioned about the applicability of the scorecard. Unrealistic goals will lead to frustration, and break down of the implementation process.

Finally, inadequate research will result in the management using the scorecard solely for remuneration purposes only. The balanced scorecard is designed to address four different perspectives that include financial measurement, internal business processes, customer perspective, and learning and growth perspective. Focusing on the financial perspective alone leaves the management blind sighted when it comes to the other perspectives. The rest are just as important as the financial element, and all these perspectives are crucial for the success of the company.